Lots of opinion polls this week have been asking whether the prime minister’s special adviser should be sacked or not – I suspect before the media storm the most common response to the question would have been ‘Dominic who?’ Strangely, there has been no opinion poll conducted for nearly a month asking whether Brits would like to remain locked up in their homes. At that point, the point of maximum fear, most were strongly opposed to ending lockdown. I am sure that now the answer, with Covid waning, the sun shining and many – myself included – ruing cancelled holidays and watching other countries spring back to life, would say very much the opposite.
As it is, lockdown is being lifted, slowly. A message from IKEA pinged into my inbox this week telling me that from the first of June I could once again buy kitchen tat, Swedish meatballs and flat-packed furniture. Other non-essential retailers will also be opening from next week, and it is surely only a matter of time before hospitality also resumes. One local pub has set up a beer tent, and must now be hoping that its extensive renovations are finished before lockdown crumbles once and for all. One look at the market’s biggest movers this week – Marston’s and Mitchells & Butlers among them – shows the expectation that the consumer economy is about to be unleashed.
It’s probably still too early to be planning the recovery party just yet, though. Let’s not forget that only a couple of months ago, many of those whose shares are bouncing back were companies that looked to be on the brink of existence. Even before lockdown these were sectors beset with constant struggles anyway – overcapacity, low margins and too much debt among them. That’s why investors should still be paying lots of attention to what they do to fix the underlying issues that Covid-19 has exposed rather than jumping on every recovery play that comes along without asking any questions.
A few drunken nights out and celebratory meals will not compensate for the tougher economic times that lie ahead, either. We are almost certainly in recession, and many people will lose their jobs. Among the results in this week’s issue are those of investment platform AJ Bell, which suggested that households – already suffering, per IHS Markit’s latest confidence index – are thinking more closely about their financial affairs because of lockdown. That means saving rather than spending may be another hurdle for consumer-facing companies to overcome – not so much the new future that we discussed last week as the new frugality.
